QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of each class: |
Trading Symbol(s): |
Name of each exchange on which registered: | ||
☒ |
Accelerated filer |
☐ | ||||
Non-accelerated filer |
☐ |
Smaller reporting company |
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Emerging growth company |
PAGE |
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Item 1. |
1 |
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Item 2. |
15 |
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Item 3. |
21 |
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Item 4. |
21 |
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PART II. OTHER INFORMATION |
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Item 1. |
22 |
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Item 1A. |
22 |
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Item 2. |
24 |
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Item 3. |
24 |
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Item 4. |
24 |
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Item 5. |
24 |
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Item 6. |
25 |
Thirteen Weeks Ended |
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In thousands, except per share amounts |
May 3, 2020 |
May 5, 2019 |
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Net revenues |
$ | |
$ | |
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Cost of goods sold |
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Gross profit |
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Selling, general and administrative expenses |
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Operating income |
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Interest expense, net |
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Earnings before income taxes |
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Income taxes |
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Net earnings |
$ |
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$ |
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Basic earnings per share |
$ | |
$ | |
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Diluted earnings per share |
$ | |
$ | |
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Shares used in calculation of earnings per share: |
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Basic |
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Diluted |
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Thirteen Weeks Ended |
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In thousands |
May 3, 2020 |
May 5, 2019 |
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Net earnings |
$ |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
( |
) | ( |
) | ||||
Change in fair value of derivative financial instruments, net of tax of $ |
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Reclassification adjustment for realized (gain) on derivative financial instruments, net of tax of $ |
( |
) | ( |
) | ||||
Comprehensive income |
$ |
|
$ |
|
In thousands, except per share amounts |
May 3, 2020 |
|
February 2, 2020 |
May 5, 2019 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
$ | |
$ | |
$ | |
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Accounts receivable, net |
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Merchandise inventories, net |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Deferred income taxes, net |
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Goodwill |
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Other long-term assets, net |
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Total assets |
$ | |
$ | |
$ | |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable |
$ | |
$ | |
$ | |
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Accrued expenses |
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Gift card and other deferred revenue |
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Income taxes payable |
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Current debt |
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— |
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Operating lease liabilities |
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Other current liabilities |
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Total current liabilities |
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Deferred rent and lease incentives |
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Long-term debt |
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— |
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Long-term operating lease liabilities |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies – See Note F |
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Stockholders’ equity |
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Preferred stock: $. par value; |
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— |
— |
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Common stock: $. par value; |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||
Treasury stock, at cost: |
( |
) | ( |
) | ( |
) | ||||||
Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | |
$ | |
$ | |
Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
Total Stockholders’ Equity |
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In thousands |
Shares |
Amount |
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Balance at February 2, 2020 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
Net earnings |
— |
— |
— |
— |
— |
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Foreign currency translation adjustments |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Change in fair value of derivative financial instruments, net of tax |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Reclassification adjustment for realized (gain) on derivative financial instruments, net of tax |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Conversion/release of stock-based awards 1 |
( |
) | — |
— |
( |
) | ( |
) | ||||||||||||||||||||
Reissuance of treasury stock under stock-based compensation plans 1 |
— |
— |
( |
) | ( |
) | — |
— |
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Stock-based compensation expense |
— |
— |
— |
— |
— |
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Dividends declared |
— |
— |
— |
( |
) | — |
— |
( |
) | |||||||||||||||||||
Balance at May 3, 2020 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
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Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
Total Stockholders’ Equity |
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In thousands |
Shares |
Amount |
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Balance at February 3, 2019 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
Net earnings |
— |
— |
— |
— |
— |
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Foreign currency translation adjustments |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Change in fair value of derivative financial instruments, net of tax |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Reclassification adjustment for realized (gain) on derivative financial instruments, net of tax |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Conversion/release of stock-based awards 1 |
( |
) | — |
— |
( |
) | ( |
) | ||||||||||||||||||||
Repurchases of common stock |
( |
) | ( |
) | ( |
) | ( |
) | — |
( |
) | ( |
) | |||||||||||||||
Reissuance of treasury stock under stock-based compensation plans 1 |
— |
— |
( |
) | — |
— |
— |
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Stock-based compensation expense |
— |
— |
— |
— |
— |
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Dividends declared |
— |
— |
— |
( |
) | — |
— |
( |
) | |||||||||||||||||||
Adoption of accounting pronouncements 2 |
— |
— |
— |
( |
) | — |
— |
( |
) | |||||||||||||||||||
Balance at May 5, 2019 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
1 |
Amounts are shown net of shares withheld for employee taxes. |
2 |
Relates to our adoption of ASU 2016-02, Leases, in fiscal 2019. |
Thirteen Weeks Ended |
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In thousands |
May 3, 2020 |
May 5, 2019 |
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Cash flows from operating activities: |
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Net earnings |
$ | |
$ | |
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Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
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(Gain) loss on disposal/impairment of assets |
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( |
) | |||||
Amortization of deferred lease incentives |
( |
) | ( |
) | ||||
Non-cash lease expense |
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Deferred income taxes |
( |
) | ( |
) | ||||
Tax benefit related to stock-based awards |
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Stock-based compensation expense |
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Other |
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Changes in: |
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Accounts receivable |
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|
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Merchandise inventories |
|
( |
) | |||||
Prepaid expenses and other assets |
( |
) | ( |
) | ||||
Accounts payable |
( |
) | ( |
) | ||||
Accrued expenses and other liabilities |
( |
) | ( |
) | ||||
Gift card and other deferred revenue |
|
|
||||||
Operating lease liabilities |
( |
) | ( |
) | ||||
Income taxes payable |
|
|
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Net cash provided by (used in) operating activities |
|
( |
) | |||||
Cash flows from investing activities: |
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Purchases of property and equipment |
( |
) | ( |
) | ||||
Other |
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Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities: |
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Borrowings under revolving line of credit |
|
— |
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Payment of dividends |
( |
) | ( |
) | ||||
Tax withholdings related to stock-based awards |
( |
) | ( |
) | ||||
Repurchases of common stock |
— |
( |
) | |||||
Net cash provided by (used in) financing activities |
|
( |
) | |||||
Effect of exchange rates on cash and cash equivalents |
( |
) | ( |
) | ||||
Net increase (decrease) in cash and cash equivalents |
|
( |
) | |||||
Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
$ |
|
$ |
|
Shares |
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Balance at February 2, 2020 |
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Granted 1 |
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Released 2 |
( |
) | ||
Cancelled |
( |
) | ||
Balance at May 3, 2020 |
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Vested plus expected to vest at May 3, 2020 |
1 |
Excludes |
2 |
Excludes |
In thousands, except per share amounts |
Net Earnings |
Weighted Average Shares |
Earnings Per Share |
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Thirteen weeks ended May 3, 2020 |
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Basic |
$ |
$ |
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Effect of dilutive stock-based awards |
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Diluted |
$ |
$ |
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Thirteen weeks ended May 5, 2019 |
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Basic |
$ |
$ |
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Effect of dilutive stock-based awards |
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Diluted |
$ |
$ |
Thirteen Weeks Ended |
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In thousands |
May 3, 2020 |
May 5, 2019 |
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Pottery Barn |
$ | $ | ||||||
West Elm |
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Williams Sonoma |
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Pottery Barn Kids and Teen |
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Other 1 |
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Total 2 |
$ |
$ |
1 |
Primarily consists of net revenues from our international franchise operations, Rejuvenation and Mark and Graham. |
2 |
Includes net revenues related to our international operations (including our operations in Canada, Australia, the United Kingdom and our franchise businesses) of approximately $ |
In thousands |
May 3, 2020 |
May 5, 2019 |
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U.S. |
$ | $ | ||||||
International |
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Total |
$ | $ |
In thousands |
May 3, 2020 |
May 5, 2019 |
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Contracts designated as cash flow hedges |
$ | $ | ||||||
Contracts not designated as cash flow hedges |
$ | $ | — |
In thousands |
May 3, 2020 |
May 5, 2019 |
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Net gain recognized in OCI |
$ | $ |
May 3, 2020 |
May 5, 2019 |
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In thousands |
Cost of goods sold |
Selling, general and administrative expenses |
Cost of goods sold |
Selling, general and administrative expenses |
||||||||||||
Line items presented in the Condensed Consolidated Statement of Earnings in which the effects of derivatives are recorded |
$ | $ | $ | $ | ||||||||||||
Gain (loss) recognized in income |
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Derivatives designated as cash flow hedges |
$ | $ | $ | $ | — |
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Derivatives not designated as hedging instruments |
$ | $ | $ | — |
$ | ( |
) |
In thousands |
May 3, 2020 |
May 5, 2019 |
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Derivatives designated as cash flow hedges: |
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Other current assets |
$ | $ |
• |
Level 1: inputs which include quoted prices in active markets for identical assets or liabilities; |
• |
Level 2: inputs which include observable inputs other than Level 1 inputs, such as quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and |
• |
Level 3: inputs which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. |
In thousands |
Foreign Currency Translation |
Cash Flow Hedges |
Accumulated Other Comprehensive Income (Loss) |
|||||||||
Balance at February 2, 2020 |
$ | ( |
) | $ | $ | ( |
) | |||||
Foreign currency translation adjustments |
( |
) | — |
( |
) | |||||||
Change in fair value of derivative financial instruments |
— |
|||||||||||
Reclassification adjustment for realized (gain) on derivative financial instruments 1 |
— |
( |
) | ( |
) | |||||||
Other comprehensive income (loss) |
( |
) | ( |
) | ||||||||
Balance at May 3, 2020 |
$ | ( |
) | $ | $ | ( |
) | |||||
Balance at February 3, 2019 |
$ | ( |
) | $ | $ | ( |
) | |||||
Foreign currency translation adjustments |
( |
) | — |
( |
) | |||||||
Change in fair value of derivative financial instruments |
— |
|||||||||||
Reclassification adjustment for realized (gain) on derivative financial instruments 1 |
— |
( |
) | ( |
) | |||||||
Other comprehensive income (loss) |
( |
) | ( |
) | ||||||||
Balance at May 5, 2019 |
$ | ( |
) | $ | $ | ( |
) |
1 |
Refer to Note H for additional disclosures about reclassifications out of accumulated other comprehensive income and their corresponding effects on the respective line items in the Condensed Consolidated Statements of Earnings. |
Thirteen Weeks Ended |
||||||||
Comparable brand revenue growth (decline) |
May 3, 2020 |
May 5, 2019 |
||||||
Pottery Barn |
(1.1 |
%) | 1.5 |
% | ||||
West Elm |
3.3 |
% | 11.8 |
% | ||||
Williams Sonoma |
5.4 |
% | (1.6 |
%) | ||||
Pottery Barn Kids and Teen |
8.5 |
% | 1.2 |
% | ||||
Total 1 |
2.6 |
% | 3.5 |
% |
1 |
Total comparable brand revenue growth includes the results of Rejuvenation and Mark and Graham. |
Store Count |
Average Leased Square Footage Per Store |
|||||||||||||||||||||||||||
February 2, 2020 |
Openings |
Closings |
May 3, 2020 1 |
May 5, 2019 |
May 3, 2020 |
May 5, 2019 |
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Williams Sonoma |
211 |
1 |
— |
212 |
219 |
6,900 |
6,800 |
|||||||||||||||||||||
Pottery Barn |
201 |
— |
— |
201 |
205 |
14,400 |
14,100 |
|||||||||||||||||||||
West Elm |
118 |
2 |
(1 |
) | 119 |
113 |
13,200 |
13,100 |
||||||||||||||||||||
Pottery Barn Kids |
74 |
— |
— |
74 |
78 |
7,700 |
7,500 |
|||||||||||||||||||||
Rejuvenation |
10 |
— |
— |
10 |
10 |
8,500 |
8,500 |
|||||||||||||||||||||
Total |
614 |
3 |
(1 |
) | 616 |
625 |
10,700 |
10,500 |
||||||||||||||||||||
Store selling square footage at period-end |
4,148,000 |
4,094,000 |
||||||||||||||||||||||||||
Store leased square footage at period-end |
6,580,000 |
6,549,000 |
1 |
Store counts as of May 3,2020 do not reflect those stores temporarily closed due to COVID-19. |
Thirteen Weeks Ended |
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In thousands |
May 3, 2020 |
% Net Revenues |
May 5, 2019 |
% Net Revenues |
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Cost of goods sold 1 |
$ |